Spread Betting Secrets – Start Off Slowly

Anyone who is new to financial spread betting would be only human if they started to get excited about the possibilities of making money on a regular basis that this form of trading offers them. There are lots of stories out there of successful financial spread bettors who have gone on to make an absolute fortune and are now living the life of their dreams and whilst these people are very real there is a word of warning for anyone who is just starting out.

It is especially important to start off with small stakes, stakes that you can afford so that it won’t be the end of the world if a trade turns against you. Think of it as part of your education, the smaller the stakes the better and if you use a broker such as IG Index or Finspreads you will find that they have system’s in place which will enable the spread bettor to start off with small sums whilst they are learning.

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Mistakes will be made, there is no doubt about that but surely making mistakes with small stakes is far better than the alternative. The problem is though that it is so easy to think in terms of what could have been and this again is a perfectly natural reaction. As an example, let’s say that someone is using IG Index and trading with 10p a point. Perhaps an interest is taken with trading the Dow and on three consecutive days a profit of 100 points is made, making this person £10 each day. It is very easy for imagination to take over at this point and the ‘what if’ way of thinking. What if the trades were made at £1 per point, or even £10, before long the feeling of satisfaction of making three winning trades is replaced by a feeling of disappointment of only trading with 10p per point.

Welcome to the world of financial spread betting where if you really want to succeed it is so important that you are able to master feelings such as these. You will often be told that getting in the right mindset is critical if anyone is to succeed in this game and it is far more advisable to try and master these feelings whilst you are trading with small stakes.

This brings us on to the subject of paper trading and you will often see this form of practice recommended but be warned, whilst there is nothing at all wrong with getting used to the markets, paper trading is about as far removed from real trading as it is possible to get. It is all very well recording the trades and noting a profit or loss but as far as the emotions go, they are virtually non existent. With paper trading it is easy to get a feeling of over confidence and this can lead to disaster for the novice trader who starts to bet with real money for the first time, buoyed by the confidence of making thousands of pounds profit with pretend money.

It is far better to use one of the brokers who allow beginners to use small stakes, even though not as intense, that feeling is still there and the profit or loss is still very real. It is important to remember that trading in this way will not last forever, as you grow more confident you can increase your stakes accordingly but until that time comes, nice and easy does it and you will look back on your financial spread betting education and realise that it was one of the best things that you ever did.

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I have been spending a fair bit of time working on my trading plan and thinking about my approach to trading so I thought I would write a bit about it. My background in the markets is purely non-professional and dates back to the mid 80’s when I used to chart share prices on graph […]

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